Question
1. What is credit history, how it is formed and for which purpose it
needs to exist?

Answer 1. If you have access to credit services
offered by banks or credit organizations, then you automatically have credit
history. The credit history enables you to see how you perform your credit
obligations.The credit history is a credit report which shows:

loans you’ve received (the number, type and date of each loan) and
related payments

information on credit obligations or how such obligations are/were performed
(whether the loan is repaid in a timely manner)

any warranty you provided

information on inquiries made on your credit history

the existence of overdue loans as well as penalties and fines applied
thereto.

(Republic of Armenia Law on Circulation of Credit Information and Credit
Bureau Activity, No. 11).

You need to have a credit report to get your credit history.

Any time you apply to the financial institution for a loan you’ll know that
the lender should evaluate your credibility through the credit report,
namely they measure your ability to repay obligations. The credit report
shall be used by financial institutions and/or firms to make decisions about
providing credit and/or selling goods and services by installment (on
credit), respectively.

The credit report is formed using information provided by banks, credit
organizations, insurance companies and firms that sell goods/services by
installment. Once credit is provided to the client, the lender shall deliver
the information about the client to the credit bureau where the credit
history shall be updated on a weekly or monthly basis. In the credit bureau
the credit history of the client shall be held in the database, and when you
apply to the financial institution for a loan, the credit bureau provides
the data to the lender financial institution.

Your credit report contains:

your personal data, including passport
details and social security card’s id number

the list of loans and warranties, including information on loans outstanding
and repaid

details of overdue loans

information about affiliated persons

inquiries on your credit history

profile of credit risk, which is calculated using a loan scoring (a
statistical and operational model that shows digital rating of the borrower’s
credit risk).

Question 2. What is a
credit bureau

Answer 2. A credit bureau is an information bank. The
credit bureau collects, processes and stores information on performance of
financial obligations by companies and individuals, and makes such
information available to lenders and consumers through a credit
report.

Question 3. How would
my bad credit history affect my action to apply for a loan in future?

Answer 3. Poor credit history may be an impediment in
using financial services. It could be a reason for determining stricter
conditions for, or non-provision of, new loans at all

A good credit history increases the likelihood of getting
a loan or getting the loan on better terms. If you’ve performed your
obligations properly, you can easily and quickly seek out more favorable
lending terms, which means a loan at a lower interest rate, with longer
maturity or simpler paperwork

Attention: If you have issued warranty to the person with
a bad credit history, you’ll also get a bad credit history, as a result

Attention: If you have a bad credit history, you cannot be
a warrant for anybody for getting loan.

Question 4. How can I
improve my bad credit history?

Answer 4. Many people do not even know what credit
history they hold. You therefore need to learn about credit history by
getting your credit report. Getting your credit history improved takes time.

first you need to fully repay outstanding obligations previously
incurred

do your loan repayments in a timely manner and make sure overdue
obligations, even for a day, are avoided

before applying to the financial institution for a loan, make sure you
clearly understand why you’re taking the loan and how much money you need. Too
many inquiries about you in a short period of time can be interpreted as if you
have financial troubles or you take more money than you can afford.

Question 5. How can I
get rid of the “holder of bad credit history” label?

Answer 5.Credit history cannot be changed for at
least five years. This implies that your credit report will
not contain the information on you which is more than five years old.

To hold a “bad credit history” means to have problem loans (loans overdue
or classified) or be a warrant to the person with bad credit history. The
moment the information on problem loans is no longer reflected in the credit
report would signify that your credit history has improved and you’re no
longer a holder of a “bad credit history”. That is possible in the following
cases:

from now up to a period over five years no updating of the information
about your problem loan (loan repaid or written off) has been carried out by
the lender

if the problem loan is fully repaid, and a period more than five years has
lapsed since the last payment

if the loan agreement [of your problem loan] contains a final maturity date
which is more than five years old.

Question 6. Where and
how can I get information about my credit history?

Answer 6. You can get your credit history from
ACRA Credit Bureau, through:

receiving a paper copy of the credit report from the bureau office
(Khanjyan 13/2, Yerevan, Armenia, Tel: 522487 or 522419)

receiving an electronic copy of the credit report online:
www.acra.am (getting an input password from ACRA office is
required).

The service costs AMD 360 to AMD 1800, depending on the type of credit
report.

You are allowed to get your free full credit report from ACRA Credit Bureau
at least once a year.

The following documents are required to obtain a credit report:

an
application for a credit report

your passport and its copy

your social security card and its copy (not required)

where another person applies on your behalf, an authorization issued by you
(notarized), the passport and a copy of the passport of the authorized person

other documents as and when required by ACRA

A credit report is usually issued immediately, once all necessary documents
are delivered. In some cases, however, making a credit report available can
take up to two working days.

Question 7. Who else
can have access to my credit history besides myself?

Answer 7.Your credit history can be accessed by:

actual or potential creditors who hold financial claims on you

your employer

Attention:your credit report can only be made available to
the aforementioned persons upon your consent made in writing.

Question 8. How long
my credit history will be retained?

Answer 8.Credit reports provided by the credit bureau
shall not include the credit information longer than five years prior to
making that credit report available (Republic of Armenia Law on Circulation
of Credit Information and Credit Bureau Activity, No. 11).

Question 9. Where to
apply if the credit history is incorrect or there’s been a complaint
lodged against the credit bureau?

Answer 9.If your credit history contains incorrect or
incomplete information, you can send a clarification or correction notice to
the company (bank, credit organization, insurance company or firms that sell
goods/services by installment) which has provided your information to the
credit bureau or ACRA.

If you do not agree with the opinion of the company or you’re not happy
with the response, you may further challenge the decision through ACRA or
through the court (Republic of Armenia Law on Circulation of Credit
Information and Credit Bureau Activity, No. 20).